Paradex trading bot hacked, 57 user keys leaked but funds were not transferred

January 21 News, the decentralized derivatives platform Paradex confirmed that its connected Mithril trading robot was hacked, resulting in the leakage of sub-keys for approximately 57 users. Paradex stated on its official X platform that the attacker infiltrated Mithril’s internal system, but the leaked keys were only used to execute trades on behalf of users and did not have the authority to withdraw or transfer funds, so user assets were not directly compromised.

According to Paradex, the affected accounts were limited to those that previously authorized the Mithril trading robot; other users were not impacted. These sub-keys were designed with “restricted permissions,” allowing only order placement or position adjustments, and could not access user wallet balances. This architecture proved effective in critical moments, preventing the security incident from escalating into a catastrophic loss of funds. However, the incident still impacted user trust and served as a reminder that third-party automated tools in the market are not risk-free.

After discovering the anomaly, Paradex quickly activated its emergency response. The platform immediately paused all XP-related transfers and subsequently revoked all sub-keys linked to Mithril, cutting off the access path for the compromised robot. The official also urged users to review their authorized external tools, keeping only those connections that are truly necessary and trustworthy. Some users appreciated the platform’s quick response, but others pointed out that security standards for DeFi automation ecosystems still need further strengthening.

Notably, just before this incident, Paradex experienced a system failure. On January 19, the platform suffered a network outage, causing Bitcoin prices to erroneously display as zero, which triggered abnormal liquidations. Afterwards, Paradex compensated about 200 affected users with a total of $650,000 and completed blockchain rollback and auditing processes.

These two incidents occurring in quick succession have once again brought scrutiny to Paradex and the broader DeFi automated trading environment. Robots and high-frequency strategies can indeed improve efficiency, but they also amplify risks related to technology and permission management. For traders, balancing convenience and security has become more important than ever.